Dollar Gave Back Some of Wednesday’s Advance

March 25, 2010

The dollar has lost 0.7% against the kiwi, 0.6% versus sterling, 0.5% against the Canadian and Australian dollars, 0.4% relative to the Swiss franc and yen and 0.3% against the euro.  Aid to Greece will be discussed at today’s EU summit, but don’t be surprised if no new game-changing details emerge.

In Asia, stocks fell 1.5% in China, 1.1% in Hong Kong and 0.3% in Thailand but rose 0.9% in Indonesia, 0.6% in India and 0.5% in South Korea.  Equities are up in Europe by 0.7% in Germany, 0.6% in France, and 0.3% in Great Britain.

Ten-year sovereign bond yields have risen by 4 basis points in Germany and 3 basis points in Japan and Britain.

Oil and gold firmed 0.3% and 0.5% to $80.82 per barrel and $1094.40 per ounce.

Japanese corporate service prices firmed 0.1% in February but remained 1.3% lower than a year earlier.  Corporate service price deflation reached minus 3.8% last August.

New Zealand GDP increased 0.8% last quarter following back-to-back gains of 0.2% in 2Q and 3Q and negative growth in the previous five quarters.  Real GDP was 1.6% below the level in the fourth quarter of 2008.  Manufacturing rebounded 4.5% in the latest quarter.

Assistant Governor Lowe of the Reserve Bank of Australia reiterated that key interest rates will need to climb in the future closer to normal levels.  Australia’s semi-annual financial stability review concluded that corporate credit conditions have become less restrictive.

Bank of Canada Governor Carney yesterday stressed that the pledge not to raise rates until after mid-year is “expressly conditional” on the inflation outlook and noted that GDP growth and core CPI had in fact recently exceeded the Bank’s expectations.

Taiwan’s central bank left its key interest rate steady at 1.25% as expected widely.

The trade deficit in the Philippines 17.8% to $682 million in January from $579 million in December and a surplus of $85 million in November.  Hong Kong posted a HK$ 19.7 billion trade deficit in February, but on-year export growth was 28.5%.

British retail sales volume bounced back 2.1% in February from a 3.0% decline in January.  Sales in the latest three reported months, however, were 1.4% lower than in September-November and just 1.6% greater than a year earlier.  February’s monthly advance was the most since May 2008.  An on-year increase of 3.5% was the best since last October.

Euroland M3 and bank loans to the private sector each recorded on-year declines of 0.4% in February.  M3 in December-February was 0.2% lower than a year earlier.  M1 on-year growth slowed to 10.9% from 11.5% in January and 12.3% in December.  Private credit was unchanged from a year before.  For some time, ECB officials have said soft money and credit growth trends are likely to continue and point to a lack of medium-term price pressures.

ECB President Trichet confirmed that a minimum rating on collateral will be kept through the end of this year and into 2011.

German consumer confidence stayed at 3.2% in April and continues to be weaker than the 4.2% reading last October.  Spanish producer prices firmed 0.2% on month and 1.1% on year in February.

The final release of Dutch 4Q national income statistics showed GDP firming 0.2% from 3Q but still 2.2% lower than in the last quarter of 2008.  Dutch personal spending in January was down 0.7% from a year before.

French personal spending on manufactured goods surprisingly fell 1.2% last month following a 2.5% tumble in January.  Such was up just 1.6% from a year earlier.  These data, and yesterday’s flash PMI reading, indicate a marked deceleration this quarter after France led Euroland growth in the fourth quarter of 2009.

Italian business sentiment rose for a sixth consecutive month in March but not as much as forecast, reaching a 21-month high of 84.1 after 83.8 in February.  Italian retail sales in January were weaker than forecast too, dipping 0.5% from December and falling 2.6% from a year earlier.

Swedish producer prices firmed 0.3% in February as a 1.6% drop in import prices mitigated a 1.4% increase in domestic producer prices.  Pricey Nordic currencies persuaded the Norwegian central bank to release a more dovish statement yesterday than previous ones.  Currency appreciation depresses imported inflation.

South African producer price inflation rose less than expected to 3.5% last month from 2.7% in January.  The PPI went up 0.4% on month.  Zambia reported CPI inflation of 10.2% in March, up from 9.8% in February.

Markets await central bank interest rate announcements from the Czech Republic and South Africa.  Neither are expected to alter policy.

U.S. scheduled data today include jobless insurance claims, and the KC Fed index.  Chairman of the Fed Bernanke will be testifying.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

Tags: ,


Comments are closed.